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Edited version of your private ruling
Authorisation Number: 1012080775902
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Ruling
Subject: Capital gains tax - deceased estate - transfer main residence to the beneficiaries
Question: Is the capital gain or capital loss made upon the transfer of the deceased's main residence to the beneficiaries within two years of the deceased's death disregarded?
Answer: Yes.
This ruling applies for the following period
Year ended 30 June 2012
Year ended 30 June 2013
Year ended 30 June 2014
The scheme commenced on
1 July 2011
Relevant facts and circumstances
This ruling is based on the facts stated in the description of the scheme that is set out below. If your circumstances are materially different from these facts, this ruling has no effect and you cannot rely on it. The fact sheet has more information about relying on your private ruling.
The deceased's spouse acquired a vacant block of land (the property) solely in their name in 19xx.
The deceased and their spouse constructed a dwelling on the vacant land.
The deceased and their spouse moved in and established the property as their main residence.
The deceased acquired the property from their spouse upon their death in mid 19xx.
In late the deceased moved into an aged care facility.
The deceased passed away in late 2011.
Probate has been granted.
Under the deceased's will their children as the beneficiaries each to receive an equal share.
As the trustee of the estate you have elected to treat the property as the deceased's main residence during the deceased's absence.
You will transfer the property to the beneficiaries within two years of the deceased's date of death.
Relevant legislative provisions
Income Tax Assessment Act 1997 Section 104-10
Income Tax Assessment Act 1997 Section 128-15
Income Tax Assessment Act 1997 Subsection 128-15(3)
Reasons for decision
While these reasons are not part of the private ruling, we provide them to help you to understand how we reached our decision.
The most common capital gains tax (CGT) event is a CGT event A1 occurs when you dispose of a CGT asset. The time of the event is when you enter into the contract for the disposal or if there is no contract when the change of ownership occurs.
CGT event A1 will occur when you transfer the property to the beneficiaries of the deceased estate.
There is a special rule that allows any capital gain or capital loss made on an asset acquired after 20 September 1985, to be disregarded if, when a person dies and the asset they owned passes:
o to their trustee or to a beneficiary, or
o from their trustee to a beneficiary.
Therefore, any capital gain or capital loss made upon the transfer to the beneficiaries is disregarded.